Eve Holding Inc Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Savanthi Syth - Raymond James and Associates, Inc. - Analyst : Hey, good morning, everyone. I was curious on the plan to build kind of the next five aircraft following this first one. Are those going to be certification conforming if they're going to be used for testing, that's going to count towards certification? And also, just what's your thoughts around the timing of those? I'm guessing you would want to test the first one and then start working on those, but curious.

Question: Savanthi Syth - Raymond James and Associates, Inc. - Analyst : That's helpful. And that's moving really quickly, which is encouraging. I'll say, if I might ask, on the production of the high volume production facility, I think, before, the thought was maybe modular design with capacity for 250 a year, and it looks like maybe that changed to 120. Just wondering what the process there was and the change of thinking there.

Question: Savanthi Syth - Raymond James and Associates, Inc. - Analyst : Okay. I must have misunderstood. That's great. Thank you. Thank you.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Thank you. Good morning, guys. I wanted to ask about just the order book. You increased it by 50 aircraft, but the pipeline amounts to $14.5 billion from $8.6 billion last quarter. And you mentioned that some list price versus reference prices. So maybe if you could talk about the change there, was it an accounting change? Why did you change it? And then it seems to suggest aircraft are going to be for $5 million less price versus $3 million previously. maybe I'm miscalculating something, but if you could tell us the right way to think about it. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 07, 2024 / 1:30PM, EVEX.N - Q1 2024 Eve Holding Inc Earnings Call

Question: Sheila Kahyaoglu - Jefferies - Analyst : Okay.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Perfect. Thank you. Thank you both.

Question: Austin Moeller - Canaccord Genuity LLC. - Analyst : Hi, good morning, Johan and Edu. My first question here. Do you expect the $280 million in total liquidity to be sufficient to get development through all of 2025? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 07, 2024 / 1:30PM, EVEX.N - Q1 2024 Eve Holding Inc Earnings Call

Question: Austin Moeller - Canaccord Genuity LLC. - Analyst : Excellent. And then do you view the increased weight of using lifters and a pusher propeller as significant and impacting the range? Or was it more important to simplify certification by not using tilt rotors to get to that 2026 date?

Question: Austin Moeller - Canaccord Genuity LLC. - Analyst : Excellent. Thank you for the insight.

Question: Andres Sheppard - Cantor Fitzgerald - Analyst : Yes, thank you. Good morning, everyone. Thanks for taking our question and congratulations on the quarter. I wanted to go back to the backlog and the revenue recognition from that. I realize you are not commenting on the negotiating prices with the customer. But I guess with the uptick without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 07, 2024 / 1:30PM, EVEX.N - Q1 2024 Eve Holding Inc Earnings Call in the listing price, I guess I'm just curious, are you basically -- are these customers going to now be paying a higher price than they initially expected? Does that change at all their interest in the LOIs, just like, in other words, if we go from three to five, will that have an impact in the order book or what's the best way to think about that? Thank you.

Question: Andres Sheppard - Cantor Fitzgerald - Analyst : Got it. Okay, no, that's super helpful. I appreciate all that context. Maybe just a quick follow-up. I just wanted to clarify, apologies if I misunderstood this, but just on the timeline for your prototypes and test flights, so, if I understood correctly, you're expecting the first prototype to be assembled in Q2 of this year, and then the other four in the second half of the year. And then, similarly, to begin test flights of that first prototype in the second half of this year. I just want to make sure I got the timing right. Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 07, 2024 / 1:30PM, EVEX.N - Q1 2024 Eve Holding Inc Earnings Call

Question: Andres Sheppard - Cantor Fitzgerald - Analyst : I see. Okay. And then the test flights for the first one will be in beginning in the second half of this year.

Question: Andres Sheppard - Cantor Fitzgerald - Analyst : Got it. Thank you so much. That's helpful. I'll pass it.

Question: Marcelo Motta - J.P. Morgan Securities LLC - Analyst : Hi, everyone. Thank you for taking the questions two follow-up here. First, going back to the average price of the EBITDA, should we read that as just like a pass through of higher, let's say, construction cost or development cost? That doesn't necessarily mean that you have higher margin on the sale of those vehicles. So just this follow-up. And on the certification you guys mentioned about the updates with ANAC conforming prototypes. So, the base case continued to be to have the certification by 2026. So, could we have any potential negative surprise here? So just to understand a little bit more on the timeline of the certification? Thank you. Hi, Marcelo. Thank you for those two questions. The first one, you're talking about the margin, I think, again, we're creating a new segment. There's a lot of challenges whether it's on the COG side. We decided to go for the best-in-breed suppliers. It's a risk sharing partnership that we have with our suppliers. We decided to have them and go for help us only -- not only for the vehicle and the development, but also the production, the series, the certification and also the aftermarket. We're all learning, let's call it. We do have challenges when it comes to the weight, the performance of the vehicle. We have also on the lead time and also the -- well, the development in general. So I don't think it's about margin right here and making sure that we're going to be making a lot of margin on this vehicle. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 07, 2024 / 1:30PM, EVEX.N - Q1 2024 Eve Holding Inc Earnings Call Like I said it's to make sure that we first of all certify. We're very, very cautious and cost cautious about how we spend the money that we have right now and the cash. We talked about this. Edu made it clear that we're in a comfortable position, but got to be very careful, and that's what we're doing. It needs to take us to the certification and it will be the second part of the question that you had or the answer that Valentini will give you an update. But right now it needs to be reasonable and what we're focused on is not only Eve to make money, but also the customer. It needs to make sense. There's actually no point of delivering eVTOLs to customers that will demonstrate not to be profitable for the operator. It will just only -- will be only selling in 100 of them, and that will be, it will kill the segment and that's not the purpose. So I think this is exactly the sweet balance that we're trying to look for with the customers, with the operators to see first, yes, are we going to be charging and what's going to be the cost of eVTOLs? You got to get the return and how much you're going to be charging on the packs. And we all know that we want to go similar to a premium risk sharing platform, but it's a long way, right. You want to make sure that you can do this effectively. So I think it's a partnership that we have with our customers and both customers and ourselves and suppliers need to be profitable, so if we want to be for the long run and we want to be for the wrong run. And for the second part, Valentini.

Question: Marcelo Motta - J.P. Morgan Securities LLC - Analyst : Perfect. Super clear. Thank you very much. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 07, 2024 / 1:30PM, EVEX.N - Q1 2024 Eve Holding Inc Earnings Call

Question: Cai von Rumohr - TD Cowen - Analyst : Terrific. Thank you so much. Guys when do you expect to basically start flight test of the conforming prototype? And then secondly, when do you hope to start certification flight tests? And what are the other key milestones that we're looking for to get us to certification and maybe give us some time frame? I know it's not a specific date, but timeframe as to when you might start those? Thank you.

Question: Cai von Rumohr - TD Cowen - Analyst : Thanks a lot. And then what are the key technology challenges you anticipate? For example, I know with beta, which is the other eVTOL, it has a lift cruise design. I think the transition from lift phase to cruise, they basically, I think have done it now, but that took them a little longer than expected. What do you think the key tech challenges are? Maybe for Valentini?

Question: Cai von Rumohr - TD Cowen - Analyst : Terrific. Thank you. Great answer. I have one last question, which is, as you know, I think the FAA is expected to -- has a schedule to finalize the operational requirements, where two of the keys are, what is the reserve requirement and the training? Do we need to be able to have two pilots upfront to do the training? Do you know where they are on that? And do you still expect the FAA, and I assume ANAC also to kind of reach finalization of the operational requirements because obviously that will have some impact on whether your design needs to be changed or not? Thank you.